Modular assembly of novel genes from existing genes has long been thought to be an important source of evolutionary novelty. Thanks to major advances in genomic studies it has now become clear that this mechanism contributed significantly to the evolution of novel biological functions in different evolutionary lineages. Analyses of completely sequenced bacterial, archaeal and eukaryotic genomes has revealed that modular assembly of novel constituents of various eukaryotic intracellular signalling pathways played a major role in the evolution of eukaryotes. Comparison of the genomes of single-celled eukaryotes, multicellular plants and animals has also shown that the evolution of multicellularity was accompanied by the assembly of numerous novel extracellular matrix proteins and extracellular signalling proteins that are absolutely essential for multicellularity. There is now strong evidence that exon-shuffling played a general role in the assembly of the modular proteins involved in extracellular communications of metazoa. Although some of these proteins seem to be shared by all major groups of metazoa, others are restricted to certain evolutionary lineages. The genomic features of the chordates appear to have favoured intronic recombination as evidenced by the fact that exon-shuffling continued to be a major source of evolutionary novelty during vertebrate evolution.